Saleem Corporation

Ethics & Fraud in Business

Problem 1

Corporations measure their taxable income over a tax year and that their tax year must be the same as their financial accounting year. Generally elect their tax year when they file their first tax return. Timing when corps. recognize income and deductions depends on their accounting method. For tax purposes corps. have some flexibility in choosing methods of accounting for individual items or transactions. However, they are generally required to use the accrual method. Corps. with average gross receipts of $5 million or less over the three prior tax years (or a shorter period for new corporations) may use the cash method. When you form a C corporation such as Saleem Corporation, you establish your fiscal year from the beginning. Once this is set, you must follow it to the life of society, unless they apply to the Internal Revenue Service for a change. The procedures for this are simple, but the consequences are not. In some cases you may have to pay a fee, and you may even be refused permission to make the change (Bettencourt, 1990).

IRS Guidelines

The Internal Revenue Service account the fiscal year, a C corporation as that established in the first year of operation. In order to change this, you must submit an amended with an application to change its fiscal year return. You can not simply file for an extension or request a new taxpayer identification number to change its fiscal year end and start dates (Birendra, 2006).

Fashion in 1128

You must fill in form 1128 to request a change in the fiscal year for a company C. The IRS requires that you ask a request of the Government on this form as part of their criteria for approving a change in tax year. Send the completed form to the IRS National Office in 1128: the Internal Revenue Service Deputy Chief Prosecutor, PO Box 7604, Ben Franklin Station, Washington, DC 20044-7604 - Ask for an application for a decision if you are not eligible for automatic approval. Attach Form 1128 to your amended return.

Automatic approval

For automatic approval, the corporation must meet certain criteria. Must not have not changed its accounting period in the last 48 months. He should have no interest in a passage entity such as an LLC. It should not be a shareholder of a company exports or domestic charge an interest international sales corporation. It can not be a personal service company, or be part of a combined federal campaign. The corporation requesting the change of fiscal year can not be part of a consolidated group that is using (Birendra, 2006).

Fees

There is no fee for an automatic approval. Fees are also waived for ruling requests involving issues related to tax people with gross income of less than $ 1 million deal. The rate is reduced to identical accounting method changes for members of a consolidated group.

Tax Law, is a subdivision of the Finance Law and is also a branch of public law ...